This is a fun analysis, but that's not traditionally how a land value tax works. Land is taxed based on (surprise) its value. Land in cities is obviously more valuable than a big farm in Missouri.
The general idea is that two plots of land in the middle of a city, one with a sky scraper, and its neighbor, a bare parking lot, are taxed the same. You don't pay more for development.
This general scheme makes intuitive sense. It prevents speculation, and encourages development (if your parking lot costs the same in taxes as the sky scraper, you might as well get some more rent from it and make it more productive.
It's nice from a "libertarian" perspective as well because it doesn't force you to develop your land. It just puts incentives in the right places.
Finally, if land is taxed more uniformly, as you described, a landlord in the city, who owns their property outright, is collecting far more in revenue than one with a similar building somewhere more remote, simply because of it's location. Nothing the landlord did justifies the higher prices, it's the restaurants near by, the subways, the well employed people in need of homes that demands higher prices. Since all that value is produced by society, it makes sense to tax it and spend it on the public good. That value, is exactly the land tax.
The land value would be determined by surveyors based on the characteristics of the plot itself, the values of the plots around it, and the values of similar kinds of plots elsewhere. So if you tried such a stunt it'd be pretty obvious because your plot would be a crazy outlier wrt everything around it for no good reason. Or you'd need to agree to some conspiracy with your neighbours to drive down the value. Of course this isn't a perfect system because surveyors can be wrong or corrupt. There would be a lot more litigation about fair land-values because more is at stake. This might or might not outweigh the reduction in legal fights over other kinds of taxes once LVT displaces them.
Another strategy is to make it so that if you want your land to be worth X for tax purposes, you're not allowed to refuse a good-faith offer to buy it for some multiple of X (plus the value of improvements). Although, this amounts to an expansion of the idea of eminent domain, which is politically difficult.
LVT is a dilution of what we currently understand as property rights. It would necessarily come with a lot more government oversight of what kinds of land sale agreements are legal, to prevent the kind of chicanery you mentioned. You wouldn't really "own" the land in the sense currently understood, it's more like "stewardship". You'd still own the things built on top of it though. I think this tradeoff is worth it (especially if other taxes are abolished), but it's important to admit the tradeoff exists and not everyone would like it.
> So if you tried such a stunt it'd be pretty obvious
Yeah. Humans are crafty though. I don't think it would take conspiratorial coordination in order for this to turn into somewhat of an arms race in prime areas. I'm imagining homeowners associations shifting prices from land value to HOA dues or some such. People putting tires and broken toilets on their lawn in front of a privacy fence. Sometimes HOA's requiring this kind of thing. People getting pissed at the nice lady who keeps trying to plant flowers everywhere. Nonsensical home renovations like putting a toilet on the ceiling or installing doors that go nowhere. People buying used syringes from diabetics so they can throw them on the street. Products that let you make your roof leak on demand. Mold markets. Just goofy humans responding to incentives.
> Another strategy is to make it so that if you want your land to be worth X for tax purposes, you're not allowed to refuse a good-faith offer to buy it for some multiple of X (plus the value of improvements)
Ah yeah this is a haymaker to the issue. Would have to let people set one exempt property or something to prevent grandma from losing her foreverhome because the neighbor's lawn toilets had made her vulnerable to a hostile takeover.
>Yeah. Humans are crafty though. I don't think it would take conspiratorial coordination in order for this to turn into somewhat of an arms race. I'm imagining homeowners associations shifting prices from land value to HOA dues or some such. People putting tires and broken toilets on their lawn in front of a privacy fence. Sometimes HOA's requiring this kind of thing. People getting pissed at the nice lady who keeps trying to plant flowers everywhere. Nonsensical home renovations like putting a toilet on the ceiling or installing doors that go nowhere. Just goofy humans responding to incentives.
Yeah probably you'd see things like this happen in some cases. It doesn't seem obviously worse to me than all the games people play to keep their incomes or profits or employee counts under various thresholds to avoid tax. Or the hundreds of other tax tricks involving charities or art or minority ownership. We're used to those things so we forget how weird and silly it all is.
The thing about land is that it's public -- you can't keep it a secret. So that makes it naturally more difficult to hide wrongdoing than when things are abstracted by accounting tricks and shell corporations. Someone can come by and just look at it.
All good points. I haven't encountered an implicit deal breaker/an issue impossible to mitigate yet while thinking about it. The devil would be in the details.
I would need to do some deeper analysis to fully convince myself that this could be applied in such a way that it doesn't screw over retirees nor drop an economic atom bomb on every major urban area. Seems more reasonable than a lot of wild overhauls I've read about though. I like it more than the "get rid of all taxes except for sales tax" idea.
High property taxes already exist in many places, why don’t people intentionally blight their properties and destroy their buildings simply to evade the property tax on a widespread scale?
In the US, it's because the current systems keep taxes so low already. There are few places where high property taxes are enough to cause the wealthy ire. Usually it's middle class people that complain about being taxed into unaffordability. They don't have the resources to drive tax valuations down.
Sure it happens sometimes, but it seems like a marginal exceptional case, rather than a rule. I have a very high property tax in my area and people seem mostly concerned with increasing their property values, not lowering them. There are other things they try to do to lower their property tax burden, but actively destroying their own property values is very low on the list.
Land is assessed for value when it's sold. That's the number you pay taxes on. In some states they assess annually.
If you tried to drive the property value down to avoid taxes, your neighbors would lose their shit and report you (because most people have their "wealth"in the form of their home). It's a neat system of weird incentives.
There's an opposite incentive to keep the value of the improvements high (i.e. the house itself and any rental income that might come from it). Degrading the value of the land is hard to do without degrading the value of the improvements at the same time. But the reverse is not true -- increasing the value of the improvements causes only a negligible increase the value of the land (and tax burden). So e.g. tearing down the house and building a quadplex to rent out would not appreciably increase the land value, so the land owner would profit from the additional rental income without having to pay very much more tax.
Of course, if everyone in the neighbourhood does the same thing, the land values will rise considerably. But that's a policy success -- the tax system has collectively incentivized land owners to increase the housing supply to meet demand.
The general idea is that two plots of land in the middle of a city, one with a sky scraper, and its neighbor, a bare parking lot, are taxed the same. You don't pay more for development.
This general scheme makes intuitive sense. It prevents speculation, and encourages development (if your parking lot costs the same in taxes as the sky scraper, you might as well get some more rent from it and make it more productive.
It's nice from a "libertarian" perspective as well because it doesn't force you to develop your land. It just puts incentives in the right places.
Finally, if land is taxed more uniformly, as you described, a landlord in the city, who owns their property outright, is collecting far more in revenue than one with a similar building somewhere more remote, simply because of it's location. Nothing the landlord did justifies the higher prices, it's the restaurants near by, the subways, the well employed people in need of homes that demands higher prices. Since all that value is produced by society, it makes sense to tax it and spend it on the public good. That value, is exactly the land tax.